U.S. mortgage rates continued to rise last week, extending the upward trend since Trump won the U.S. presidential election.
The contract interest rate on 30-year fixed-rate mortgages rose 5 basis points to 6.86% in the week ended Nov. 8, the highest level since July, according to data released Wednesday by the Mortgage Bankers Association.
U.S. mortgage rates have climbed 72 basis points in the past six weeks, the biggest increase in two years, and have risen in six of the past eight weeks. So far, mortgage rates have reversed all the declines that occurred before the Federal Reserve's first rate cut at its September meeting.
The Mortgage Bankers Association's applications index fell 11% in the week ended Nov. 1, marking six straight weeks of declines.
U.S. housing mortgage rates move in sync with 10-year U.S. Treasury yields. It should be noted that MBA data ended last week, and the 10-year Treasury yield rose further this week.
Since Trump was elected as the next US president, the market expects that this will lead to tax cuts and deregulation, and the US government will increase debt supply to make up for trillions of dollars in deficits, and US bond yields have soared. The current market expectations that the Federal Reserve will significantly launch loose policies are fading, and the US Treasury market has sent a signal that Trump's return to the White House may trigger a new round of inflation.
The surge in U.S. mortgage rates is a blow to the hopes of millions of American homebuyers who need lower borrowing costs to buy homes at a time when prices are high. The sharp rise in U.S. mortgage rates is expected to deteriorate home sales and leave a large number of properties unsold.
In an October Fannie Mae survey, only 20% of respondents said now is a good time to buy a home, down from 60% four years ago.
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